Will the EU block WorldCom-Sprint merger?

European Union Competition Commissioner Mario Monti's trip to Washington, D.C., comes amid reports that he has decided to block the megamerger.

7 September 200211:53 am AEST

BRUSSELS, Belgium--The European Union's top antitrust official was expected to discuss a proposed alliance between WorldCom and Sprint on a trip to Washington, D.C., today.

EU Competition Commissioner Mario Monti's trip to Washington comes amid reports that
he has decided to block the megamerger. The merger would create a telecommunications giant
with revenue of more than $50 billion, making it one of the world's largest companies.

Monti will meet later this week with Attorney General Janet Reno, Assistant Attorney
General Joel Klein, Federal Communications Commission Chairman William Kennard and
Federal Trade Commission President Robert Pitofsky.

Amelia Torres, a spokeswoman for the EU antitrust watchdog group known as the European Commission, said Monti "will probably discuss'' the proposed alliance with antitrust officials while in Washington.

The Washington Postreported today that Monti would tell U.S. antitrust officials that the commission had decided to oppose the deal.

Asked about that report, Torres said the commission had until July to decide whether
to approve the merger.

"I have no comment. It would be premature to speculate on what
the commission will decide," she said.

EU antitrust regulators are concerned that the new company will dominate top level
Internet access. A decision is likely at the commission's July 5 meeting.

WorldCom and Sprint unveiled the merger plan--a stock swap then valued at $115
billion--last October and notified the European Commission in January.

In February, the commission issued a statement extending its probe and voiced "serious
concerns" about the effect of the merger on Internet access to markets,
on telecommunications services to business, and on long-distance telephony.

The companies have offered to sell Sprint's Internet business. But Monti has indicated that
the commission would prefer WorldCom to divest UUNet, partly because it's a
standalone business. Sprint's Internet activities are an integral part of its business and, so,
are less easy to separate.

The deadline for concessions passed June 8 with no sign that WorldCom and Sprint had agreed to sell the lucrative UUNet subsidiary, which is the
lynchpin of WorldCom's new emphasis on data and Internet services.

"UUNet could prove to be the deal breaker," said Kiran Desai, competition partner at
Rowe & Maw law firm in Brussels.

The European Commission made MCI sell its Internet business during its 1998 merger
with WorldCom.

Officially, it is too late for WorldCom to submit further concessions, but "in exceptional circumstances" this can be done, Torres said.

Today, Sprint spokesman James Fisher said that he had no comment on The Washington Post report and that high-level talks with the U.S. Department of Justice,
which also is scrutinizing the deal, were continuing.